May U.S. jobs data defies expectations

James Hydzik

7 June 2024 - 23:14

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May U.S. jobs data defies expectations

The U.S. Department of Labor released the May 2024 jobs data on 7 June. Hiring and unemployment both came in higher than expected.

U.S. employers added 272,000 jobs in May. Gains were registered in several sectors. Health care led the rise with 68,000 new jobs. Government hiring gained 43,000 additional jobs after a dip in April. Leisure and hospitality work came in a close third with 42,000 jobs. Average hourly wages grew 0.4 percent month-on-month, or 4.1 percent year-on-year.

The unemployment rate rose to 4.0 percent (from 3.9 percent) for the first time since January 2022. Acting Secretary of Labor Julie Su stated that, “the rate of unemployment has been at or below 4 percent for the past 30 months, the longest stretch since 1970.”

The consensus before the numbers were released included 180,000 jobs and unemployment at 3.9%. Following the report’s publication, markets fell, though they regained the lost ground by the end of the day, and closed up for the week.

Acting Secretary Su issued the following statement on the May 2024 Employment Situation report: “The labor force participation rate for prime-age women once again set a record high at 78.1 percent. Women have powered our nation’s economic recovery after the pandemic, and they continue to strengthen our labor force.”

12 June and the Fed’s reaction

The reaction from the Federal Reserve has been muted, and no changes are expected. However, if the unemployment rate continues to creep upward, the Fed’s hopes for a ‘soft landing’ will be dashed, and if employment continues with unexpectedly high gains, the risk of higher-than-desired inflation will reappear. For the moment, there is no indication from the Fed that interest rate changes and outlooks will change much.

The next waypoints for the markets will come on Wednesday, 12 June, when the Consumer Price Index report for May is released. Also on Wednesday, the Federal Reserve will release the June monetary policy decision. The consensus projection currently is that consumer price rises will have slowed on a month-on-month basis. Underlying factors are also expected to have tempered.

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